IDBI Bank, the largest lender to the Jaypee group, on Thursday asked the Supreme Court to vacate its Monday’s stay order and allow the NCLT-appointed IRP to turn around real estate developer Jaypee Infratech’s finances and help recover Rs 10,000-crore debt.
IDBI Bank, the largest lender to the Jaypee group, on Thursday asked the Supreme Court to vacate its Monday’s stay order and allow the NCLT-appointed interim resolution professional (IRP) to turn around real estate developer Jaypee Infratech’s finances and help recover Rs 10,000-crore debt.
While the bank had orally mentioned its plea before the apex court on Tuesday, it filed a detailed application on Thursday. It said the stay order had the “unintended effect of derailing the whole time-bound process envisaged under the Insolvency and Bankruptcy Code”. “The stay order inadvertently undoes all the developments that took place after NCLT’ August 9 order… IRP is in the process of verifying all the claims received from the creditor and soon the first meeting of the committee of creditors would have been held,” it added.
In its fresh affidavit filed through counsel Bishwajit Dubey, the IDBI Bank said the stay order had the impact of transferring the control and management and bank accounts of Jaypee back to its promoters who had led the company to this situation. “As consequences of the stay, control is transferred to Jaypee promoters as a result of which all stakeholders, including all the creditors, will lose control. The financials of Jaypee are already in a poor condition and the creditors are concerned that such a transfer will prevent the assets of Jaypee from being managed properly,” it said, adding that it is in the interests of all the stakeholders that the IRP, who is a neutral person and in-charge of running Jaypee as a going concern is not prejudicial to the interests of the homebuyer and he owes a fiduciary duty to all the stakeholders, including creditors.
Around 32,000 buyers have booked their flats in 27 different housing projects of Jaypee Infratech. IDBI Bank has loaned the company Rs 4,000 crore of the total exposure of Rs 10,000 crore.
Stating that fresh funding is not possible without a viable resolution, the bank said reinstating the management doesn’t help the homebuyers as well, as the company lacks the financial strength to fund or arrange funding that is required for completing the projects. “The only hope for the projects to be completed is a viable resolution plan under the Code which enables fresh infusion of funds in the company. If the present management is reinstated without a resolution, the FIs will not be able to fund the company any further as the account has been classified as a non-performing asset since March 31, 2016. The prospect for the homebuyers to keep their chances of getting their flats is a viable resolution as, if that fails, liquidation assets will be sold and proceeds distributed in accordance with law,” Dubey said.
According to him, homebuyers are duly protected as they can file their respective claims before the IRP and statutory framework cover home buyers as well.
Alleging that the buyers’ petition was “premature” as nothing prejudicial to the interests of the homebuyer has happened so far, Dubey said the homebuyers could have moved such a petition if they were not considered as stakeholders by IRP or if the resolution plan did not protect their legitimate rights. “None of this has happened so far,” he said. “The process for framing of the resolution plan should continue as the possibility of resolution clearly outweighs the rights of any individual stakeholders as compared to the benefit of all the stakeholders,” stated IDBI.
The affidavit comes in the wake of the Supreme Court on Monday staying the insolvency resolution proceedings against Jaypee Infratech on flatbuyers’ pleas. The application will come up for hearing on Monday.
The Allahabad bench of the NCLT had in August admitted the IDBI Bank’s plea for initiating insolvency proceedings against the debt-ridden Jaypee Infratech for defaulting on a `526-crore loan.
While initiating the liquidation proceedings under the Insolvency and Bankruptcy Code of India 2016, the tribunal had appointed Anuj Jain as the IRP to carry out the proceedings, as the board of directors of the company would remain suspended.